Auxilium Pharmaceuticals, Inc.
) reported first quarter 2014 loss (including stock-based
compensation expense) of 47 cents per share, much wider than the
Zacks Consensus Estimate of a loss of 14 cents per share. The
company had reported a loss of 12 cents per share in the year-ago
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First quarter revenues increased 34% year over year to $88.5
million. Revenues were boosted by the inclusion of Actient and
newly launched Stendra revenues. Label expansion of Xiaflex also
contributed to the increase. However, revenues fell short of the
Zacks Consensus Estimate of $99 million.
Quarter in Detail
Testim posted sales of $11.8 million in the first quarter of
2014, down 74% year over year. Testim revenues in the U.S.
declined 76% to $10.9 million. Sales were negatively impacted by
slowing growth of the testosterone replacement therapy (TRT)
market. Auxilium Pharma stated that the slowdown in the TRT
market could be due to safety concerns raised by the U.S. Food
and Drug Administration (FDA). Sales were affected by
higher-than-expected destocking of Testim.
The company launched Stendra for erectile dysfunction and Xiaflex
for Peyronie's disease (PD) earlier this year. Auxilium Pharma
recorded Stendra U.S. net revenues of $11.6 million (including
product shipment to wholesalers). In its first quarter conference
call, the company said that the product has been received well
and already enjoys 6% of the new PDE5 prescription market.
Auxilium Pharma is looking to expand Stendra's label to include
the 15-minute onset of action claim. The FDA is expected to
render a final decision on Sep 20, 2014. The product's fast onset
of action and a favorable side effect profile could help Stendra
pick up share. We note that the company in-licensed Stendra from
Xiaflex's U.S. revenues grew 38% to $16.6 million. Strong initial
launch momentum has been observed for Xiaflex for the PD
While Testopel generated revenues of $32 million, Edex revenues
were $5.5 million with 52% market share. Both these products were
gained from the Actient acquisition.
Research and development expenses (including stock-based
compensation expense) for the reported quarter declined 7.6% to
$11.0 million benefiting from lower spending on Xiaflex. Selling,
general and administrative expenses (including stock-based
compensation expense) shot up 74.0% to $77.1 million mainly due
to the Actient acquisition as well as higher marketing and
advertising spend related to the launch of Stendra and Xiaflex
for the PD indication.
Last week, Auxilium announced a guidance cut in anticipation of
weak Testim revenues. The company cut its revenue guidance by $70
million to $380−$420 million. The Zacks Consensus Estimate of
$447 million is above the slashed guidance range.
In 2014, the company expects Testim revenues to be less than $85
million due to a shrinking TRT gel market, lower Testim market
share, downward pressure on TRT gel scripts due to concerns
regarding safety, inventory destocking and higher rebates.
The company expects prescription volume in the TRT gel market to
go down by 25% in 2014 from the 2013 level.
The company now expects to report break-even results or a loss of
up to $15 million this year instead of reporting a net income of
$45 million to $50 million projected earlier.
Auxilium Pharma's first quarter results missed both revenues and
earnings estimates primarily driven by lower-than-expected Testim
revenues. The company's guidance cut prior to the earnings
release was also disappointing. It had then led to a steep
decline in the share price.
The company is now banking heavily on the successful
commercialization of Xiaflex and Stendra.
Auxilium Pharma currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked biopharma stocks worth considering include
Alexion Pharmaceuticals, Inc.
Enanta Pharmaceuticals, Inc.
). Both carry a Zacks Rank #1 (Strong Buy).